Why some greens favor energy bill

Tucked away inside the mammoth Energy Policy Act of 2003 - all 1,148 pages of it - lies a tiny provision: a $125 million federal loan to retrofit an idle "clean coal" power plant, converting it into a conventional coal utility.

It's not big as electric plants go, just 50 megawatts sitting unused since it was built in 1999. But it also stands just five miles from Alaska's Denali National Park and threatens to foul the park's pristine air.

Taxpayers will be paying "to turn a dirty coal plant into an even dirtier conventional unit," says Anna Aurilio, an analyst for the US Public Interest Research Group, a legislative and environmental watchdog group in Washington, D.C.

America's new energy bill is many things, but environmentally friendly it is not, say environmental lobbyists, who are almost apoplectic about its "dirty energy" provisions.

But while environmentalists steam, the surprise is that some renewable energy trade groups are actually excited over the money the bill is likely to send their way. Indeed, the bill threatens to drive a wedge between green power and environmental activists.

For the first time since 1986, there's a 15 percent tax credit, up to $2,000 for homeowners who buy solar electric or hot-water systems - and there's a similar credit for wind power or fuel-cell systems.

By effectively splitting off green-power advocates from the environmental movement, the bill's Republican authors have enhanced its chances of passage (it cleared the House Tuesday and, at press time, a vote was pending in the Senate) and blunted criticism that the GOP doesn't protect the environment.

House Energy and Commerce Committee chairman Billy Tauzin, (R) of Louisiana, hailed the bill as one of the most far-reaching in US history, saying, "Americans can look forward to cleaner and more affordable energy, reliable electricity, and reduced dependence on foreign oil."

But is it a net plus or minus for the environment? That depends on whether one looks at the provisions themselves - or weighs them in the balance of the nation's overall energy policy. Consider the tax breaks for residential renewable energy. They could boost renewable fuels at a time when consumers are taking a closer look at the technologies.

"More and more consumers are looking to deploy renewable-energy systems to improve the environment or to provide additional security from blackouts," says Glenn Hamer of the Solar Energy Industries Association, which represents solar-energy manufacturers. SEIA and the American Wind Energy Association have endorsed the bill. But Mr. Hamer figures that credit is worth only $100 million - peanuts, compared to the bulk of spending in the bill.

About three-quarters of the bill's estimated $25 billion in tax incentives and funding would go to spur oil, gas, coal, and nuclear power production - including "clean coal" programs. About $6 billion in tax credits go to the nuclear energy industry alone, the US PIRG says.

Only about a quarter of the total is targeted at renewable sources such as solar, wind, geothermal, ethanol, and hydrogen.

Notably excluded from the bill is a renewable standard that would have required that 10 percent of the nation's electricity be produced by renewable energy sources by 2020, up from 2 percent today. (Europe, by contrast, is on track to produce 22 percent of its electricity from renewable sources by 2010.) Nor does the bill mandate higher gas mileage from automakers. Such omissions have led most environmental groups to condemn the bill.

Who else likes the energy bill? Ethanol producers do - and so does Gary Duffy. A farmer who lives with his family in Oldham, S.D., he plants 500 acres of corn.

"I do expect to grow more corn or at least get a better price for my corn because of this legislation," he says. "I'm excited about it."

Indeed, ethanol is one of the big exceptions in an act that leaves alternative fuels alive but sputtering.

Under the bill, ethanol production will double over the next five years to 5 billion gallons annually.

This may provide key political support from Democratic senators from corn-belt states - like Sen. Tom Daschle of South Dakota - critical to getting the legislation through the Senate.

But will doubling ethanol output make the air cleaner? Ethanol, when mixed and burned with gasoline, reduces some car exhaust pollutants, but increases others. Environmentalists say it is a wash. Others are less sure.

Jerry Taylor, director of natural resources studies at the Cato Institute, has studied ethanol, but says he is no environmentalist.

"I expect ethanol will have an overall detrimental impact on environment by encouraging excessive corn production - and heavier use of fertilizer and herbicides" that pollute water running off the land, Mr. Taylor says.

Hydrogen looks to be the other big winner among renewable alternative fuels. Praised by President Bush in his State of the Union address, hydrogen promises much - a nation of "freedom cars" whose exhaust is just water, energy independence from the Middle East, and an entire economy running on a nonpolluting energy source.

But even the $1.8 billion in the bill targeted for hydrogen research and development is unlikely to make much of dent in pollution over the next decade, analysts say. And even those in the business who should benefit from federal R&D largess are concerned.

"There is significant funding for hydrogen, but it is not the centerpiece, as I expected," says Stephen Tang, president of Millennium Cell, an Eatontown, N.J., maker of hydrogen fuel-cell equipment. He worries that it may be just window dressing. Others say the same.

The Energy Policy Act includes about $1 billion to develop technology to turn coal into hydrogen and another $1 billion for a nuclear plant in Idaho to turn water into hydrogen.

These plans irk Jeremy Rifkin, president of the Foundation on Economic Trends and author of "The Hydrogen Economy." "We're all for hydrogen - we think it's the future," he says. "Where many of us disagree is where do you extract it from - water and biomass, or coal? President Bush is essentially hijacking hydrogen and using it to bolster the interests of the fossil fuel and nuclear industry."

Meanwhile, environmentalists complain that the Energy Act also includes provisions for:

• Exempting oil and gas companies from having to obtain permits to control polluted storm-water runoff from drill pads, pipeline corridors, and refineries, as required by the Clean Water Act. It also exempts them from the Safe Drinking Water Act when injecting chemicals during oil well drilling.

• Giving cities with poor air quality longer to clean up, but without stronger pollution standards as mandated by the Clean Air Act.

• Allowing the leasing of the National Petroleum Reserve Alaska, a 37,000-square-mile piece of northern Alaska, for oil and gas production without protection for wildlife.

• Allowing the Interior secretary to designate utility and pipeline corridors across public lands without seeking public input.

Despite the environmentalists' complaints, John Livermore, program manager for the Sun Power for New Homes program in Massachusetts, is excited.

Solar technology is always a tough sell in northern states, but he's working with a home builder who is offering solar panels as an option on new high-end homes.

The pitch: "Would you like solar with those oak cabinets?"

"I don't know about the oil drilling in the Arctic that might be in this bill. I'm concerned - but we're very optimistic about these tax credits," he says.